direction they take, we need to be prepared before they materialize. there is much we do not know about how cyber threats will affect us going forward, this much is clear. we can dedicate efforts now to harden our defenses and to lay the groundwork for working together effectively now i'm willing to the future. responding to cyber threats is both a challenge and a charge for us. the measures we tend to respond to these threats must be sufficiently durable to stand the test of time and sufficient flexible to accommodate the changing threat picture. with the help of groups like the standing committee and the many thoughtful mines this morning, i am hopeful we will make good progress towards this goal. i want to thank you all for being here this morning and for listening to me and having me. thank you so much. [applause]

>> we have a few minutes before miss monaco's staff puts me on a watch list. >> i appreciate you in both roles. i think those of us who've had clients know the challenge of having that duality. can you talk to us about how you balance both your role as an overseer for agencies and as an advocate? >> you and your lawyers know that we do play both roles. it is interesting, nsd the sit at this juncture. we are not formally of the intelligence community. we're not formally members of the intelligence community. that is probably the right balance.

we have to make sure we are both earning the trust of the clients and the operators and agents with whom we work. by being creative problem solvers, but also maintain the ability keep that trust by being creative, by helping our clients work through operational issues. i like to -- the lawyers to work in our office, we talk about how it is important not to be dr. no. you cannot be red all the time. you cannot be green and a yes person and captive to the client. worst of all, if you are an operator, worst of all is to be flashing yellow. constantly on hold, constantly in limbo.

we tried to act as a navigational device, earning the trust and being creative. helping you get to where you want to go, but doing so in a way that will be consistent with statued executive order and the rule of law. >> i have to say that not everything that we recommended worked out the way we expected. nsd worked out exactly as the commissioners had hoped. it has been a major contribution to the innovative lawyering in national security. i want to ask you about the cyber security crisis that we face. we do not have resources and government to investigate every one of the intrusions against private industry. the question is how can -- at

the same time, we know a lot about the guys who are breaking into our networks. we have dedicated attention to that and it will allow us to take action against the people doing it. how do you draw on and use the resources of the private sector? if ibm is in intruded on, they will spend a lot of money to find out who it is on. how do you do that without turning the internet into the wild west? >> you have been very thoughtful in this area, stuart. it will be a place before not only prosecutors and agents in the field to plug in, but to also be a forum for the private sector.

our goal is to make sure we have all tools that we can apply to a particular problem. and to make sure we are preserving those options and working with interested parties to make sure we can do that. something like prosecution will not always be applicable in all circumstances. it may be a viable option in some cases to act as a deterrent and as a way to disrupt a threat. the more information sharing we can have and good relationships we can have with the private sector, understanding that that will not always be satisfactory. the private sector can share with us information. we have to first know about the breaches and the intrusions that occurred before we can do anything about it. that sometimes causes concerns for companies.

if they trust that we will use that information wisely and try to help and work with them to combat this siphoning off, hopefully, we will all be better off. >> thank you. for graciously giving us your time this morning. we want to give you a copy of our latest publication. do not be offended, paul. your ethics council will find this of minimal value. >> no comment. [applause] >> that concludes our breakfast. >> next, a look at the projected cuts in defense spending.

then, the future of the us energy production. then, a discussion about the future of afghanistan. >> if you ask who describes themselves as libertarian, depending on what you look at, you might be getting between 10 and 15%. if you give them a battery of questions, and then you track those two different ideologies, pending him what you are looking at, you get may be up to 30% americans calling themselves libertarian. are you economically conservative but socially liberal, you get almost half of americans calling themselves that is what they are. just because they say these things, it does not mean that they believe them. if you ask most americans, do you want smaller government? they say yes. you want them to less money? they say yes. if you ask for a particular item

on the budget, they do not want to cut anything. it is not clear. i have to say, roughly -- as low as 10% and as high as 30%. libertarians, if they were kind of dodges and political, they could be a big movement. it could be a big group of people who have a shared ideology and influence in politics. it is not organized that way right now. >> a political primer and libertarianism. author jason brennan on what you might not know, sunday at eight on c-span. >> about $500 billion of automatic sequestration in defense spending cuts was scheduled to take effect this month. on monday, the brookings institution hosted a discussion looking at the dental effects of defense cuts on national security. this is about two hours.

>> good morning, everyone. i am michael o'hanlon from the 21st century defense initiatives. we are delighted to welcome you here. after bob has spoken, i will come up and we can ask some questions. that will be your chance to intercede and pose questions on your mind. he will pose questions for about half an hour. then we will go straight to a panel discussion.

again, thank you to all of you for being here. let me say a brief word about a pale, for whom i had the great pleasure of working 20 years ago at the congressional budget office. a fantastic career in national security, as noted, the comptroller of the pentagon today. one of the top officials. the key adviser to the secretary of defense on all matters financial. trying to figure out how to save money and execute efficiencies and reforms within the defense budget. he has a long career in national security. he was a navy officer at the beginning of this career. work for the logistics management institute. he was my boss at the congressional budget office for a number of years. including during the. when the berlin wall had just come down.

he worked with people on both sides of the aisle at that. of time. he worked with the clinton administration. without further ado, please join me in welcoming one of my favorite defense budget experts, robert hale. [applause]>> good morning, how is everybody doing? . good. i am glad to be here for a number of reasons. we do not get invited out that much as comptroller's. there's probably a good reason. an olympic athlete, practicing

every day for the olympics -- i will try my best. the key issue facing us right now is, how do we maintain national security in leaner budget times. recently, the main declines in the defense and -- defense budget have been in war times. we have seen some real declines in the base portion, and there may be more coming. what do we need to do? i will offer three thoughts, starting with, we need a strategy to -- how we go about

maintaining national security. that is the first and maybe most important thing. second, we need to make more disciplined is of the money we get. we have to stretch our defense dollars. i will tell you what we are trying to do. third, i would say with that we desperately need more stability. budget size and budget process. i will say if you were that the end about sequestration and other things that fall in the category. let me talk about each of these points. starting with the tragedy -- strategy, it could q2 success when you are facing lean budget times, if you do not know where you are going, any road will do. without a strategy, we would not know where we are going. we needed to guide decisions. in some past drawdowns, there has been an across the board nature to them. the cold war drawdown had some

across the board aspects to it. it is important that a year ago, january 2012, president obama announced a new defense strategy. we believe it is the right one for the times. interestingly, despite a lot of criticism for all the specifics that we opposed in connection with that strategy, criticism on the hill, most members of congress seem to have accepted the strategy. it is meant to help us confront a comp likes national security challenge. this think, syria and the arab spring. iran and relations with the whole world, including israel. north korea and so many more. what are the elements to the strategy? i will not spend a lot of time on it. briefly, it assumes we will be smaller and leaner forces. they will be highly ready forces. we will no longer assume that we have them for long operations.

we will look for ways to reversibility. we understand that we often guess wrong. we feel we must -- those forces must be highly ready. there is very much aid no notice category or quality to the sort of threat to national security. that will be important when i come back later. the second major item in that strategy is to rebalance our forces to were the asia pacific and the middle east. we have done the middle east pretty well. we are working toward rebalancing toward asia pacific. it moving around some forces. fewer marines on long, for example. for example. possibly a presence in the philippines. we will pay attention to long- term threats in the asian area, including china. we will maintain technological

superiority, the third element of the strategy, and invest more in some high-priority heads of activity. ciber, special operations. we recognize we will have to delay a cut back on weapons programs to meet budget constraints. we have used this to guide budget decisions. we have worked to increase things like ciber investments and a number of other things. we think this is right for the times. we also believe that the current level of defense spending is roughly consistent with that strategy. so, we hope congress will continue to support that level, or at least something close to it. strategy is not enough, and lean budget times -- strategy is not

enough, and lean budget times, we owe it to the taxpayers to stretch defense dollars wherever we can. we have a number of initiatives to do that. economists often referred to these as efficiencies. i do not like the term. little of what we're are doing is an efficiency. more often, what we are doing is eliminating lower priority programs where we think that makes sense in order to hold down spending. i prefer the phrase more disciplined use of resources. what have we done to make more disciplined use of resources? two major packages in the last two budgets. one for about $150 billion over five years. some cuts before that, as well. many involve eliminating lower priority weapons programs, for example we terminated the future combat system in favor of

a more focused ground combat vehicle. we terminated tea set satellite. we have ended production of the f-22 aircraft. a number of other initiatives, two. -- too. for the first time ever, we established a combatant command. we have been grouping our buys to try to use our market power to get better prices. we have look at things like consolidating e-mail networks. reducing use of contract services where we can. some categories that do qualify as efficiencies, the air force, for example. they put flight programming software on their aircraft. maybe consult -- consolidating wireless contract. we are trying to you that on a

bigger scale. another major set of initiatives has aimed at slowing the growth in military compensation. it has grown sharply over the past decade. we have proposed, and congress has agreed to some, increases in fees for military retirees. it had not then -- for their healthcare, it had not an increased in more than a decade. we got congress to agree in increases in pharmacy co-pays and at causing people to make better use of mail order and generic. overall, we tried to slow the growth in dod health care. i mention some of the fee increases. we have also sought and achieved major changes in the way we pay healthcare providers. for example, using medicare rates to pay for outpatient care and the department of defense. we were not doing that a few years ago. some initiatives for making better use of defense resources

have been oriented toward improving -- we are committed to achieving auditable financial statements. the first time, we have a realistic plan to accomplish what is a very major task. auditable statements will help us improve our business processes. they will help reassure the public that we are good stewards of their funds. more disciplined use of resources. we need to consolidate the structure, we are engaged in restructuring our civilian personnel to try to reduce their numbers. looking at a restructuring of the military help system. i recognize there is more to do here that we have not, fundamentally, change some problems for the department of defense. also growth in military compensation. i think it is fair to say that

we have had a fairly aggressive effort to hold down defense costs, and that will continue. the last step is the key to managing and leaner times, is more stability. both in terms of budget size, and ajit process. -- budget process. i hope there will be a fifth defense budget during my tenure as a comptroller. the third, in february 2011, featured some substantial reductions. the last one featured a significant reduction $487 billion over 10 years. the bill congress passed on new year's day on the fiscal cliff legislation made for some further progress. i would argue, the national security challenges have not gotten any less complex.

in this lack of budgetary stability makes it very hard to plan, extremely hard to plan well. the nation's security would be better served if the congress adopted and then stayed with a more stable budget plan. we have also not enjoyed much process stability during my tenure. i have personally coordinated for shutdown drills. two of them, i was sitting in my office at 8:00 at night, not knowing at night if we would shut down or not. six-month continuing resolutions. we are under one right now. they hogtie the department and its ability to manage. they are very difficult to manage. there are a umber of legal restrictions. we had a crisis last week divergent. he continued specter of sequestration is out there. in more than three decades of working in and around the

defense budget, i have never seen it. a period with such uncertainty that we are looking after the next few months, through march. it gives a whole new new meaning to march madness. i cannot wait for it to be over. what does 2013 look like? i know that we face sequestration, starting now, on march 1, 2013. we are still looking at the details, but the total sequestration appears to be $45 billion, if it all went into effect. about nine percent of our budget. that is less than the sequestration he faced before passage of the new year's day asked. that would have been as much as 12%. we also cannot rule out an extension of the continuing resolution throughout the rest of this year. that would sharply reduce the

operation and maintenance funds that we have available and that we need to maintain readiness. think back to my statement earlier, readiness is one of our highest priorities. to add to the problems, we believe we must protect funds for wartime operations. we cannot leave the troops in afghanistan. that means even larger cuts. we face a confluence of some unfortunate events. a year-long continuing resolution that will reduce funds available, especially for readiness. the possibility of sequestration and the need to projects -- these could all lead to some adverse effects on readiness.

we face a lot of uncertainty and find ourselves balancing a lot of risk. on a lighter note in what has been a somber talk, a story about a speaker who is giving a talk on cost and risk. he asked somebody from the audience to come up. he had three questions. it will help illustrate the challenges we face. the first question, imagine there is a 40 foot long beeam. six inches high. i will pay you $100 if you walk across the beam. would you take the risk? demint said, sure. -- the man said, sure. ok, this time it is strung between 24-story buildings. ok, third question, same beam, i am at this end, i have one of

your three children, if you do not walk across, i will throw him off the building. would you take the chance? the man thought, and he said, which child have you got? sometimes, as a defense manager, i feel like i am throwing my own children off of a building. i realize they may be some of your children, as well. i will try to answer your questions. i believe there are three key steps that we need to take -- we need more stability. in terms of size of budget and budget process. the decisions that are made over the next few years and months will be vertical to our national security. pineda put it just right last week, when he said, every day,

the men and women of the department of defense put their lives on the line to protect us all here at home. those of us in washington have no greater refundable it again to give them what what they need to succeed and to come home safely. all of us in the leadership of the nation have worked together to provide that stability. our national security demands no less. with that, i will stop and try to answer your questions. >> we will startck here, sir. >> tony with a bloomberg news. you said $45 billion sequestration case and in march.

just review that. it was up to 62 billion added last week. what has changed and will modernization take a disproportionate amount of this if it happens, because of your ?wn rates question ma >> the law has changed. also, a potential second sequestration, they reduced the caps. they changed the that cut it back. we would not have the authority under sequestration to choose between o and m and modernization. unless we can reprogram, and that would be pretty limited, we would not have that option. >>

our best estimate is still rough. these estimates are quite complex. looks about $45 billion for defense. >> here in the fourth row. are you likely to be upset with your likely new boss chuck hagel? >> i am not sure what the president will announce today. if i did know, i would not scoop him. is it is senator hagel, we will work with him and the american people. we need to balance. defense budgets are about risk. you get a certain amount of money, you get a certain amount of risk. if the country decides that want to take some more risk, we will go for some lower budgets. we will work with whoever is

the nominee today, assuming that person is confirmed, to make those trade-offs. we'll find a way to do them. >> further back, all the way to the wall. >> on the pacific realignment defense bill and the frozen money for guam and open our -- okinowa, web is taking so long to get the report out customer clicks -- what is taking so long to get the report out? >> we have not fully convinced the congress. i believe we will make this work. it may be later than we help. we will come up with a plan that

we will achieve our goal. that is to maintain our presence in the pacific area while moving some of the marines off japan.now i >> kate brennan from politico. what assumptions are you using to build the 2013 budget and how those might have changed over the last couple of months or even the last week? xp strategy is one we have already announced, and i summarized very briefly. many of you know it well. that has been the guiding principle. we are planning on the same top line numbers that were announced with the budget a year ago. i do not know whether those will change or not he did it a possibility that they will, given the american taxpayer affect and the new year's day legislation on the fiscal cliff.

we do not know yet. there may be some dollar changes tbd. i think the strategy will stay the same. it will certainly try to adhere to it. we think it is the right one for the times. >> thank you. will you give us the priorities and how will you help senator hagel to share the same priorities of spending in 2013- 2014? >> what was the first part? >> refers back to your story about the state of your current heart. and would you tell us who is

your most loved child? and spend the priorities of first, second, and third periods and do you think senator hagel and share your love the same way? how do you convince them? >> whatever is the case, whoever is the nominee and if they are confirmed, we will work with them. that nominee will have to get in place and be confirmed in that person will have to tell us what their priorities are. as of now, we have one secretary of defense. his priorities are clear. i would hope the problems would stay in place, with regards to the strategy and mentioned earlier. i know that is kind of a non- answer. >> i will intercede with a question myself. >> you can't mention hagel. >> i will not.

i will mention robert griffin the third. he was injured yesterday. we will forever live the clock at that moment until he is back in action next year. my question about the procurement budget and what will happen to it. there are some prior-year defense budgets that continue to fund industry. that is sort of good news for industry. the uncertainty about this year's budget authority is mitigated. how should we understand the head the defense industry is taking right now, in percentage terms? is it five, 10%, 20% cut in the kind of spending and jobs that might otherwise be taking place right now? >> it is so hard to defined what the baseline is

right now. if you go against the 13 budget, the actual -- the continued resolution of total dollars is actually a little higher than the proposal on the 13 budget. we have been limited to the fiscal 12 level. i will say this to try to be helpful. if sequestration occurs, the percentages have to be the same. by line item. we will not have much ability to make changes. if we simply get a target for a top line reduction, we will try to do it in a balanced manner. there is a long history why -- early and a drawdown, the cuts are heavily on the investment portion of the budget. it takes is a while to make force level decisions. they gradually drawdown the size of forces. if we are allowed the authority to make choices, they will probably be investment heavy in the beginning, with more reductions in operating costs

after a few years. we not only have to have the authority to do it by law, but not be under sequestration, but we need the u.s. congress to agree. some of you know that they have misgivings about our force level reductions we have already proposed. let alone any that would come in the future. >> paul? >> you mentioned that you saved quite a bit of money by terminating the c-17 and f-22. my sense is, this was not at the same time that we had a stimulus bill of $787 billion in order to create some jobs. canceling those two programs probably cost somewhere in the neighborhood of 50,000 jobs. a two-part question. one, do you have any idea what the exact number is? two, and i

correct in understanding that dod got none of the stimulus money? meaning that, while you are expected to take the same kind of cuts as the mystic programs, when it increases, you got none of them? >> id none of the job impact. i would strongly argue -- they do not enter into decisions about what we do in defense. we need to try to implement a good strategy for the nation. the job should be handled -- it is separate. we did get some of the stimulus money. we got about $7 billion. seven, i believe. it was about one percent. there was some military construction. those are the two major

categories we got some, not huge amounts. we participated in job creation there. as i said before, i understand how important jobs are in an economy that we are experiencing today. i still believe the department's main job is to propose a national security strategy at a reasonable funding level. the job issue should be handled by other means. >> here in the fourth row. >> i'm with cq. following up on the budget question for fi14. when do you expect that to be done? >> i think it is almost inevitable there will be some delay. normally we would be transmitting data but right now we are not ready to do that.

there will be omb's called as to what delay occurs. we will quickly start looking at alternatives as we do constantly in the programming process. we cannot have a lot of guidance yet. we will look at a variety in attempts to be as ready as we can when we get top line guidance. >> in august, you testified to congress about some of the sequestration. i'm curious about the joint strike fighter that would involve cutting four of the platforms. is that still the case under sequestration order that james a calculus? >> if we were giving

illustrations in aug -- okinowa ust. if sequestration goes into effect fully, which i hope will not cause, it would be a 9% reduction in each line item of our budget and that would include joint strike fighter production. the program manager will have to look at that and figure out how they accommodate it. i think there could be some reductions but i am not prepared to say. >> i am probably the only person the in the room is n journalist. do you see path that industry can help improving the efficiency and if so, what does that path?

>> i can only answer that generally. i know that is quite general but i think it is the best i can do. holder better buying car initiatives -- working closely with industry. we owe you some stability. we are not there yet but i am still hopeful we will get their after the next set of negotiations. >> center for arms control. would you clarify how much of the 487 defense said they could get from what they called efficiencies? i like your definition better. how does the sequestration figure of $62 billion, how do you a ride at that?

i keep seeing a 57.4 billion. >> i can try. the five-year number was $259. about $60 were from more discipline sources. it was probably roughly the same. i do not remember. the are starting to go from sequestration 101 to 201 now but let me try to be helpful. under the law before the new year's day legislation, there was a sequestration of about 54.7. our share was about 52%.

there is also a cap in the budget control act and sequestration associated with that. in a prior law, we thought it would be about $10 billion. we now think the total will be more like 45 million. -- like $45. it is smaller because they changed the law and some of the caps and reduced the size of the sequestration negotiations. is that clear? sorry. >> you requested authorization for base closures. how much savings are still there? we have seen the fifth round of the base closure process was one where it was difficult even more so than in past rounds. that is perhaps not surprising. >> i think there is consolidation's out there.

i will not give you examples because that would end my tenure quigley but we believe there are tenure quickly but i believe there are. there were more transferring units around and a fair amount of force protection efforts that were quite costly. the best i can do is some rough history. if you look at the 1993 and 1995 rounds, the average savings once we were fully in place with $3 billion a year. i think that is probably realistic if we get a base closure authority again. before we know for sure, but would have to go to the process of going to every base and

insulation and organizations and asking for data and making specific decisions, and then letting the commission review them. there are more savings to be had. both in terms in dollars and personnel. if congress wants us to hold down defense spending, they need to give us authority to move ahead with infrastructure >> if you talk about balance. congress reversed those decisions there is a push right now to reduce active-duty and increased the guard. also the push that governors need to be actively involved in the decisions of the defense budget. comment?

>> it did allow us to move forward to some extent. we got part of what we were looking for. that is good. in terms of the governors, we want to work with them. not to the point of releasing information trade we need to work with them and we will. i am concerned generally that the congress wants both for lower defense budget. if we are going to hold down this budget. they turned down many of the requests we made to slow the growth that did the military compensation by changes in retiree health care. i believe we will need to continue to work with them to

make changes. it is a challenge. >> one more. i think i saw a hand back there. >> i was wondering if you could provide insight on guidance regarding sequestration, especially now that things have changed. are you eyeing guidance? >> we are looking at that. i cannot give you the timing are content at the moment. we are further along in the process.

the guidance is out there. i suspect we will want to continue not to take specific steps in anticipation of sequestration. he still want the congress to not let sequestration go into affect. but we are looking again at what guidance would be appropriate in the near term. i am not sure what that will be. >> thank you for the chance to be here today and for your thoughtful questions. i appreciate your time. [applause]

>> we are ready to start. i am peter singer. the director of the defense initiative here at the brookings institution. with the major and confusing things going on today in defense and defense budgeting with various debt ceiling deals, averted sequestration or not averted sequestration, this is a very timely period to be having this conversation. we are joined by a fantastic panel of experts to help us cut trees some of this confusion. and pull back and look at some of the bigger strategic questions out there. i'm joined by three folks. the senior fellow and director of research here at brookings institution. he is one the most prolific voices in this issue and has written hundreds of articles,

including one on foreignpolicy.com right now. his most recent book includes opportunity, why nuclear arms is still important and the wounded giant, america's armed forces in an age of austerity. the larger and by one of the top thinkers and teachers in the field of security studies. he is a professor at columbia in university. his numerous books have garnered critical success from the american political science association for the best book in political science. he is also a key facilitator of a facility studies workshop. he has a great deal of experience in the policy field.

the senior fellow, he is a former staff member a mark on the national security council and served six years on the national security advisory panel. most recently, he was part of a task force of experts about a new defense strategy for a new era. and a scholar at the american enterprise institute. he has more than three decades of public service and higher education. he was president of the world bank, dean of the johns hopkins school of international studies and assistant secretary of state for east asia. and long served at the pentagon. the great panel to be joined with. i will pose a question to each one of them to kick off the conversation then turn it over to all of you. the first question i want to pose to mike -- what the heck happened on new year's day and even what does it mean for defense?

what do you see playing out in the next weeks moving forward? >> thanks, peter. we just heard robert hale wrestling with the questions of where we are in the process. we got a two month reprieve. keeping this among top of the lead for the most unstable budgetary decision making periods ever. especially when there is no quick surprise in the terms of military operations. the afghanistan conflict is in its 11th year. the pentagon has not a lot of opposition over its request for funds there. president obama may soon decide on a faster downsizing of troops. the $88 billion requested for overseas contingency operations and into 2013 is a relatively noncontroversial part of this whole thing. let me talk about a couple of numbers.

that $80 billion is about half of where we were, need to be added about $550 billion in the base budget plus the nuclear weapons activities of the department of energy is about $550 billion in 2013. we do have a defense authorization bill, it does have limited significance this year sent the appropriations which provide the money are being done on this ongoing continuing resolution bases and since sequestration is still a possibility in two months. to give a feel for that $550 billion, how does that compare to a couple of reference point? you can look of that number as being really big or modest, depending on your vantage point. historically in the cold war, we averaged about boarded 75 -- $457 billion dollars a year.

that is adjusted for inflation. on the other hand, we are now down by about $100 billion from repurchase the couple years ago. what's a because those war costs are coming down and because the base budget has not been adjusted for inflation in about three years. it hasn't been essentially flat. this estimate of the point -- this gets to my other point. the typical answer here reflects the politics of the person making the argument. more than it does budgetary common sense. let me explain what i mean. if you want to set the budget is still huge, use a $550 billion plus $88 billion. it is still well over three times cina's budget. case closed.

if you want to say this is not a lot of money or that it is coming down, you point out that we have already had a freeze on that budget for three years and we have been bringing down the war costs substantially. this year, it is about $100 billion less then it had been a few years ago. the other point i would make is that robert hale mentioned $487 billion. that is relative to the pentagon's previous plan that allowed for a little bit of growth above and beyond the inflation rate. the congressional budget office and establishes a much more neutral base. let's consider the base line for any discretionary programs to be current budget adjusted upward for inflation. relative to that base line, the pentagon is absorbing $350 billion in cuts.

that does not account war costs. they're coming down even faster. i have probably thrown too many numbers at you to be clear, especially for the television viewer. but in summary, we are at the point for you can have a good spirited debate over whether the budget is too big or too small. i will pass back to you. >> richard, you have worked on issues of strategy for your entire career and recently a study on a new u.s. defense strategy. what are the key priorities we should be thinking about today? what are the implications of those for budgeting moving forward? >> the key priority is one that will be hard to make -- to rethink some of the basic assumptions bit -- behind policy and strategy. some were not reacted to as they should have been at the end of the cold war. we had high defense spending

because it was necessary and affordable. today, it is needed. this may change soon -- it is neither. this may change soon. if we get into a cold war with china. we should try to prevent that. the main threat to national security is terrorism. it does not account for the expense of parts of the defense budget. i would also argue that the defense budget has been too high and too small. depending on what you measure it against. i think it has been too small for the missions we define ourselves since the end of the cold war. a high degree of military activism and intervention. what has been an attempt to do all this on the cheap, with the important exception of the first war against iraq in 1991, we tend to underestimate the signet underestimate significantly the costs of the war we get into.

the kosovo war, the second war against iraq, the war in afghanistan and so on have proven to be much more difficult and taxing than we thought. if we are going to do this, we are kidding ourselves to think that even high defense budgets we have had since the end of the cold war are enough. i would say they are too much in that the need for that degree of military activism ended with the cold war. this is the basic political ideologue to call issue that -- ideological issue. we should keep pushing in the direction that things have been moving in the last few years. that is towards a more modest view of military missions and requirements. it would be hard to make huge savings in the defense budget, although i think the problem with sequestration could be a blessing in disguise if that is the only thing i can force the sort of discipline and choices the political system is unable to make.

you can make the case that the degree of activism have had -- i think it's a mistake to inflate leadership with the responsibility of doing the job ourselves. we have less than 5% of the world's population. less than a quarter of the world world economic product but over 40% of the world's military expenditures.

we are talking about serious with development. billions of dollars to ohio hundreds of thousands and millions of people and creating new jobs. our broader priorities fall within that priority. hud do we take advantage of this once in a lifetime

opportunity to shift to concentrate that back here again to what the united states? that is our priority. tax her being a priority to the question. regulatory policy. the states have already acted it. the move in and enacted their opportunity. for them to go ahead is not good policy. we will be watching those areas closely and to make sure we take advantage of the game tension opportunity again to the states. >> i wanted to ask you a question about api's relationship with the obama administration. before the election, you said it seemed they were being -- they

were reaching out more compared to the start of the administration. are you seeing more of that now that the pre-election has happened a? i use seeing that you are able to get your messages across to the administration? are you seeing from them? you talked about expanding access with the reelection of the obama administration is seems that is pretty much off the table. the five-year plan is off to which they do not seem to be a movement towards expanding access. is there a deal that could be made there? >> and let me try to remember all of the questions all and respond accordingly. there is lots of opportunity to develop u.s. resource. the outcome rests the authority, the congress could act.

there is already under foot and some expanded to expand the potential opportunities. there is bipartisan support in for tinia. you have been looking in does arizona and the resources. the chairmen is talking about a revenue sharing proposal very on with senator mikulski. these are significant shifts in policy that would allow for the responsible development of oil and natural-gas. it is not all rest within the administration. we have seen an increased dialogue with the administration. the i think some of that has become about with recognizing the game tinging opportunity. it is no longer rhetorical parody go to pennsylvania. you see the potential of the

industry provides to our economy, job creation and it is not insignificant. the only thing i might add is to remember a in a state of the you mean you referred courted yesterday's a guess as esther the's analogy. it became a full endorsement to produce oil and natural gas because that is where the american people ought. almost two-1 today, we should produce our own energy resources. they know we can say it here safely. the revenue in a generation is here potential and the natural security implications. i think the president did the right thing when he moved back and said we need to produce the resource. our relationship as proof route.

we will be able to move forward and find a common ground a. i think the is what the public expects of us. >> he mentioned in your remarks liquid and a key departments and 12 years. how does that jive with the efforts to remove the fuel standard? >> i think is so very consistent we could it be illiquid self-sufficient in north america within 12 years is what the analysis shows the canadians can be the no. 1 importer and blues with a do that as quickly as eight years. there has aura refined analysis of the united states but potentially bring and from

canada. who will bring in in renewable fuels. the book continue to bring in their product. we will combat, major avesta's with renewable sources of energy. >> what we are seeing now is not good policy. we are coming up to the wall. they are now pushing for e 15 the field. even the aaa warned consumers not to use the fuel. you have saying we will not warranted the on the cars if you use this hire pattern. increased fuel costs and renewable of standards. many industries, consumer industry, the rest court since to be. a waiver request was made and it

denied it. it's just renewable fuel standards do not work. therefore, they need to be a changed and the need to be repealed for more workable. renewable fuels are a key part of the of for structure of the united states but not if the system are the policy does not work. and then to a 2007, it is put in place driven by the need to win us off of oil. today we see that occur to the vast domestic property and in of the united states. we need to realize that the policies and make them more effective and make them more workable. that is why we will pursue policies this year to chance the standard. the quirks >> speak really

allowed a. >> do i think they need to what? i think in as you will. doubt and the secretary of interior and others the shell is being closely watched apart as the earth moving equipment back and forth apart. are not only highly regulated are monitored in what they're doing. this is a perfect example of wars and which we need to cooperate and make sure the lead as good as technologies are there. allow for the real-estate development of the resources. they're being closer look at. the united states needs to be more thoughtful about our own interests. they are pursuing the opportunities.

>> >> epa to funding policies are you must come -- concerned about? >> we are breaking on a number of things. we have to make sure the fraudulent rents are and then to of the future. the government is to step through a venture their roles of the program does work and function. i did not mention to the earlier question puree here we have a situation where it is not a commercial quantities. but the epa taxes in the industry. that is costing us millions of dollars to provide revenue for the government because we do not use a fuel that is nicest. that is a problem. bad public policy, they will be working about that. we have talked about it earlier.

we are looking closely at fuel approaches. to date we have not seen any of the certificates and of the proposals. they have put them off for the time being. it will continue to put them often to other it's as if it is for them. we will have a longer list we think it through. i sent this to have a locker list. >> will spend well over $100 million on advertising and promoting its public and and. happy but this did the change of it to with the iraqi smart what how is your take on that after the adjustment? >> a couple of answers to that.

we are very pleased with our success to date and the ongoing are rich of successful people with the american people. congress is so lacking in decatur. with response to those who elected us and -- the key is to help the american public and to help the american public to speak out. we have very pleased with the success to date. we see record high support for the oil and natural gas. he see the american people becoming more active the more they understand and the but the girondist them for the country, all of the things we have been talking about. we are pleased with the dialogue it. a lot of the message in moving forward and enter reckon with the american public will be interesting with the future. if you look at the high numbers of the investments that are

making, $545 billion a year over one trillion dollars, every two years. just the oil and natural-gas industry is investing in our economy. this is a big deal. the stimulus the congress enacted as a few hundred billion dollars to stimulate the whole economy. we are doubling montreal and dollars every few years. there is broad support for the american gas and industry. we believe that will continue to grow. ec center is today talking about important areas to improve the natural gas and oil production. this thing's to happen overnight but they are happening at entering a new direction. >> we have multibillion-dollar programs and we will continue to

advance the broken selling for rick advantage of ventura the public dialogue. >> let's try again a call. >> this is peter from montana. how big of a role has development of in north dakota and montana with the debut of the united states to expect from the next 5-10 years. >> the bulk information onto eastern europe montana that he is resting has been very significant. north dakota has set record production every year and produces right around $750,000 a day. the only stood to surpass that is 7.5. as i mentioned, the north dakota

i did for the past year has telexed colorado and california to become the number to double real producer. that will continue to grow, perhaps not as fast as a expired today. it half and 10 years ago they produce $60,000 per day. over 10,000 board it was a few years ago. this is how significant a change the technology has been with the resource of in this specific part of the balkan formation. >> you did not mention in greenhouse gas roles among the roles they are communicating with the epa on. there are still under court order to finalize greenhouse gas roles. items that will happen i in the power sector. are you mention that will not happen, did you see new

opportunities to reducing greenhouse gases? what is your sense and communication? >> i think there is to demand has that need answering. as " the a concern that we believe could be handled appropriately. the second piece of that that did a mentioned, our should not overlook the vast production of the natural gas resource today, which has resulted from $13 down to $3. >> the more consumption of natural gas has abrupt greenhouse gas emissions to the united states to 1992 levels. fed required of a government mandate. it was simply a matter of what the economy produced as a result of producing a clean fuel. i believe what the epa should do

is look to regulate these are activities and they need to be thoughtful. this is the broader question about access. here we have a claim burning fuel that is a carbon emissions. the oriole and natural-gas industry is a leader in pursuing zero carbon admiting technologies. but the very feel we have allowed to produce is what is driving the carbon admissions. that should be taken into consideration with other aspects. >> we are constantly improving. what we do in terms of admissions, and again, we need to look at where the admissions are coming from the vast majority of the missions are

occurring today so it is very appropriate to look at that today. that is very quite small compared to others forbes. the >> we are largely a pocket book nation. one year ago because of the last address, prices for approaching record highs. we're seeing national average of the dollar stood 3 cents a gallon right now. what has changed since the last addressed with mark >> the continue the revolution of this opportunity. today more of the american people understand what is happening to the united states. hundreds of thousands of new jobs have been created since last year. more are starting to recognize the significant impact that can take place on a geopolitical

global basis as a result of what is happening right now. we talked about one of the friends after the discussion today. he happened to be in the battle east. what we are talking about here is the topic of conversation that enter the middle east. it is the conversation in asia and what is that? because it is again changing opportunity. have the opportunity to shift the access of energy power to the united states. " we do it. we are right on the threshold. is evolving in a positive way. farseeing bipartisan support with the development of energy here until the country. north carolina could become a major natural-gas producer. he was elected and asked what was his top to make north

carolina and energy state. places we did not traditionally think of as energy states. this opportunity spends the entire country. michigan, ohio, the list goes on. as would is changing. more people are becoming aware of this the opportunity. i believe it will continue to grow. >> we have the time for a couple of more questions. >> humans and declining structure of natural us. exports would not happen in today's economics. there are either too high or too low. considering the number of access that has a depth and

manufacturing. do you think we are thinking of ourselves up for a difficult the with the court needing more that rule death. but what the important thing about this study is it reminds us that intervene in regulate the exportation of the natural of us at this point to reclusive the focus on the benefit. it's to be treated and the at the commodity that we're producing. we cannot look to discriminate be against the as corporate as what the narrow study underneath -- as with the data concludes. the question you posed gets to the issue the industry looks at a public basis. what does the future look like? most are based on 5-10-20 year outlooks. they are looking at the private sector performs well.

they get to of the risks. this should be shifted to the task here. it does provide for a looking into features with the market may be. >> faults can i get afterwards and say hello. there are many opportunities to expand the footprint in the united states today. all of that was a bad the discussion. the ample and what i believe is the neurasthenic approves is whatever level it may or may not be. it is positive for the economy. >> >> we have two questions left. thank you.

just a quick to question on their attitude toward investment towards the united states and an accent and if you think that there is going to be more investment in china. the level playing field of from some of they are and announced positive a by the chinese government at? where is your approach from the take on the going forward? what's i do not have an opinion of that. i have not thought much about that. >> they have the above with the engagements are doing? i think kelly from our industry. they operate on a global perspective and a general view is to allow the market to work. there is no expansions in the marketplace. eddy not think i have given it much thought.

klutzy i am sorry we cannot accommodate more stories from the phone. this is the last question. >> there will be sunday nominees for the environmental protection agency and the department of energy. there were a couple of big sites one has part of of some here. the expected to be a fight within the energy and of be a and you describe to be the white house and will he be participating i did kill any think as it occurs? >> i put not want to hurt any candidate for endorsing the it is i keep that quiet. i think clearly there will be some changes. we have decided to move on. i think what is important is we

get resent, thoughtful scientifically balanced areas. we look at defense and a look at senator hegel and others, lots of issues regarding that. i think of the to the science areas where we need to be focused. i but not want to judge where he is going. anybody who would fill the roles to seek to have a relationship with -- to base policy development in sound science and to pursue the beach will difference that we can find a common ground and i did for a policy development. we have been having a and a lot over the past couple of months. have there is that we disagree on. we have areas that we represent a seized the area for them with the area might. we believe regulation should be thoughtful and they should be

based on science. as what does the composition in dealing with the regulators. we welcome the opportunity to work with whatever president will nominate. we look forward to it based on sound science and on pure philosophy. >> thank you for joining us. >> thank you. i in sure we will follow up questions anybody else will have it. what's next, a discussion about the future of afghanistan. california rip hovey s. bruce sarah. the role of the democratic leadership and the 113th congress and issues including the debt ceiling debate, and aggression, and gun laws.

>> if you s, and arts of a identified but syrians, depending on which poll you look at you might be giving 10-15%. if you give people a battery of questions about how many ideology things. , the track them to different ideologies. are you economically conservative but socially liberal? it how many americans caught themselves. it does not mean they necessarily believe of a central event. if you ask if you want smaller government, they say yes. if you ask them to cut any particular item on a budget, the soccer if they really deliver it. this someone i have, i will have

to say, roughly somewhere between the lowest 30% and highest 20%. if they were conscious and political, they could be a big movement and a big group of people that have a shared ideology and politics. >> the political primary and libertarianism. what you may not know tonight at the clock on suspend's q and a." >> the former u.s. ambassador to the european union. the former former secretary of pakistan on the future of afghanistan. the discussed regional security and political uncertainty. this is 90 minutes.

this is the latest installment of you well. i think we all not that we are at an inflection point. president kazia is hip.

we have the ambassador to afghanistan amount of the things. we have ambassador who among the other is was the foreign minister. he is the ambassador to china. we have the ambassador of afghanistan to the united states. they have been intimately involved with respect to the important issues regarding afghanistan with the real issues of the region. we call the event of "back to the feature." some have spoken to be before about this. i think the bullet that even large as the discussion goes on. we have fundamental issues to talk about the military presen